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Technology Stocks : Comdisco, Inc. (NYSE: CDO) -- Ignore unavailable to you. Want to Upgrade?

To: Silver Knife who wrote (332)	12/23/1999 10:23:00 PM
From: John Chapman	Read Replies (1) \| Respond to of 689

A Yahoo post messages.yahoo.com ............: --OPINION:------------------------------------------------------------------ CDO's board approved plans to create a tracking stock for Comdisco Ventures. The new tracking stock for Ventures is intended to reflect the performance of the venture financing business of CDO. This organization was formed 12 years ago in 1987 and since then has committed more than $1.7 billion to more than 675 venture capital-backed companies. Ventures recently completed a record year with $229 million in revenue, +101%; $71 million in pretax income, +145%; and $200 million in equity/book value, +182%. The value of the mark-to-market basis has more than doubled since the quarter ended 9/30/99 to over $400 million (At 9/30/98 the mark-to-market value was $40 million, at 9/30/99 that unrealized gain was $194 million. Today, it is worth $400 million. The unrealized value increased by 900%, from $40 million to $400 million, in 15 months! Within the past two weeks six companies in the portfolio have completed initial public offerings. Ventures currently has 12 companies in its portfolio that have S-1 registration statements pending with the SEC. CDO expects to file a preliminary proxy statement relating to the creation of the Comdisco Venture tracking stock with the SEC in January 2000. The company will then call a special shareholders meeting in the spring of 2000 for approval. This will be the first public opportunity to invest in a top-tier venture-based business. In addition to an operating entity which last year generated $71 million in pretax income, Ventures also has $400 million of off-P&L value, that is $400 million of investment value (potential revenue warrants received as risk premiums) that can be sold within the usual 180-day lockup period. Some of Ventures most successful investments include Ariba, Ask Jeeves, Copper Mountain, Critical Path, E-Loan, E-Toys, E-Tiffany, Inktomi, North Point, NextCard, Stratus One, etc. Nortel invested $10 million in Prism in exchange for 1% common stock. Nortel's 1% private investment in Prism at a $1-billion valuation follows a similar investment by Williams in Prism's common stock announced 12/9/99. Nortel and Williams each own 1% of Prism. Prism is still in the process of finalizing an appropriate management team. We believe new Prism board member Jim Voelker, who has an impressive history in telecommunications, is pro-actively involved, which is good news. We believe a new CEO for Prism should be on board in the middle of the March quarter. Another issue facing Prism is deciding the best method of the spin-out, whether to do a straight IPO or a tracking stock. The company is examining the tax consequences before a decision. We believe Prism will be spun out by the middle of 2000 and that a $2.5 billion valuation on Prism is fair given the valuation on comparable CLECs is +$3 billion currently.